Page 25 - Newcom

Titanium posts stronger Q1 revenues
Management “cautiously optimistic” about remainder of the year
BOLTON, ONTARIO
First quarter earnings improved for Titanium Transportation Group, particularly in its logistics busi- ness, which benefited from the expansion of its sales force and the company’s move into a consol- idated terminal.
The group posted Q1 revenue of $29.8 million, a 6% increase year- over-year. EBITDA was $2.9 mil- lion, a 17% increase. Net income for the quarter was $129,284 com- pared to a net loss of $185,129 during the first quarter of 2016. Titanium attributed the sharp increase in net income to growth and improvements in the logistics business, reduced corporate costs, and the non-recurrence of a foreign exchange loss in Q1 2016.
The logistics group saw revenue increase 33% to $9.5 million. Truck transportation revenue was $20.6 million, a 3% decrease year-over-year.
Ted Daniel, CEO of Titanium, said the company’s balance sheet is strong and it is ready to continue pursuing its mergers and acqui- sition strategy. It is considering both “tuck-in” and “transforma- tive” acquisitions.
“Despite continuing softness in the transportation market, our logistics division exhibited strong organic growth in the quarter,” Daniel said. “This was driven by the growth and development of our in-house sales team after moving to our larger purpose-built head office location in the third quarter of 2016. From a strategic perspec- tive, Titanium continues to remain focused on delivering the compa- ny’s next phase of growth and is well positioned in a weak overall industry environment.”
On a conference call with ana- lysts following release of Q1 results, Daniel said he’s “cautiously opti- mistic” about the year ahead. The first quarter is typically the com- pany’s weakest, due to the higher fuel and repair costs incurred in the colder months.
However, Titanium management isn’t expecting the impending elec- tronic logging device (ELD) man- date to save the industry from pric- ing pressures any time soon.
“I don’t think anybody really knows when that’s going to happen, in terms of seeing prices increase in the market,” Daniel said.
Operations manager Marilyn Daniel suggested there could be an impact, and some relief on pricing pressure, in the latter half of 2017 and into 2018.
“ELDs are a huge component, but there are other (factors),” she said. “We are anticipating an exit of some drivers from the industry who are in
their senior years because of a lack of desire to use ELDs.”
Titanium said prices have been driven down by 5-10% over the past year, as shippers leverage excess capacity in the market.
Ted Daniel said Titanium is in a position to double in size and is in discussions with several acqui- sition targets. It has an additional $35 million in credit it can tap into to meet its growth objectives, but Daniel said acquisitions must be “accretive and synergistic.”
What kind of acquisitions does the company have in mind?
“I don’t believe in a good deal, I believe in a fair deal,” Daniel explained. “Because I don’t think you can have a situation where someone can buy a company and it’s a smok- ing deal and you have a winner and a loser. That is a formula for disaster. I believe, first and foremost, the right price is where everyone is a winner. The vendor is selling something that has good value and we are getting a good price and that way both of us are happy. We are integrators, so one thing I’m looking for is, some overlap and expansion to our geog- raphy, some overlap and expansion
on product lines, we like sticky cus- tomers where there is some value added in terms of the mix, and we like good corporate cultures.”
As far as organic growth is con- cerned, Daniel said Titanium has expanded its sales force by about 20% since moving into its new head- quarters last year.
Last year’s acquisition of a Wind- sor terminal has been a success, management said, with revenue climbing to $775,000 in the first quarter compared to $630,000 in Q4 2016. The North Bay terminal is also in growth mode, Daniel said. TN
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June 2017 • Truck News 25